Guaranty Financial Corp · OTC:GFCJ
Guaranty Financial — Goldman Sachs Small/Mid Cap Financial Services Symposium 2008
38 slides from Guaranty Financial's conference presentation, Feb 11, 2008
Slide 1: Goldman Sachs Small/Mid Cap Financial Services Symposium
Goldman Sachs Small/Mid Cap Financial Services Symposium February 11-12, 2008 Focused on Maximizing Value for Shareholders
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are identified by their use of terms and phrases such as “believe,” “anticipate,” “could,” “estimate,” “likely,” “intend,” “may,” “pl
Slide 3: Company Profile
Company Profile Over $16 billion in assets 2nd largest publicly-traded depository institution headquartered in Texas 158 branches Texas - 102 California - 56 Insurance agency – 9 th largest bank-owned agency in U.S. Top 11 officers have been with the bank an average 11 years and in the industry an a
Slide 4: Investment Highlights
Investment Highlights Branches Located in High-Growth Texas and California Markets Loan Growth Driven by Geographic and Product Diversification Lowering Costs and Improving Financial Performance Strong Credit Culture Controlled Interest Rate Risk Experienced Management Team We believe Guaranty is un
Slide 5: Strategy
Strategy Grow commercial lending franchise Grow retail franchise in TX and CA Increase fee income Provide distinctive customer service Improve operating efficiency Maintain strong credit and risk standards We believe the combination of our strategy, expertise, growing markets and financial strength
Slide 6: Loan Portfolio
Loan Portfolio 17% 13% 15% Dec. 31, 2007 Maintain diversified loan portfolio Overview $10 billion total Strong middle market focus Strong energy lending with focus on E&P Significant commercial real estate experience Lower risk single family mortgage portfolio Single-family mortgage Single-family co
Slide 7: Grow Commercial Lending Franchise
Grow Commercial Lending Franchise 1% to 5% of loan portfolio 5% to 10% of loan portfolio Greater than 10% of loan portfolio Nationwide targeted markets As of Dec. 31, 2007
Slide 8: Commercial Loan Balances
Commercial Loan Balances ($ in Billions) Continue strong growth in diversified commercial loan portfolio focusing on business, commercial RE, energy, middle market and senior housing $5.5 $7.2 $6.2 $8.2 *Excludes asset based lending, which was exited in 2006.
Slide 9: Strategy
Strategy Grow commercial lending franchise Grow retail franchise in TX and CA Increase fee income Provide distinctive customer service Improve operating efficiency Maintain strong credit and risk standards We believe the combination of our strategy, management expertise, growing markets and financia
Slide 10: Grow Retail Franchise in TX and CA
Grow Retail Franchise in TX and CA Texas Demographics 2nd largest state in U.S. (pop. 23 million) 3 of the 10 largest cities in the U.S. Houston # 4 San Antonio # 8 Dallas # 9 2nd fastest growing state population 4 of the 25 fastest growing MSAs: Dallas area # 2 Houston area # 3 Austin area # 18 San
Slide 11: Grow Retail Franchise in TX and CA
Grow Retail Franchise in TX and CA California Demographics - 56 branches - $2.4 billion in retail deposits at 12/31/08 - 31 st largest in California by total deposits - Significant presence in Central Valley and the Inland Empire California Retail Operation Largest state in U.S. (pop. 36 million) 3
Slide 12: Grow Retail Franchise in TX and CA
Grow Retail Franchise in TX and CA Launched program to open 42 de novo branches. 18 de novo branches opened through year end 2007. Growing branch network in targeted areas De Novo Branching Previously Existing (140 ) New (18) To be opened (24) San Diego San Francisco Sacramento Central Valley Los An
Slide 13: Deposits
Deposits Diversified deposit base Total Deposits (Dec 31, 2007) Total: $9.4 billion
Slide 14: Grow Retail Franchise in TX and CA
Grow Retail Franchise in TX and CA ($ in Millions) Continue to emphasize non-interest bearing checking deposits Non-Interest Bearing Deposits $443 $519 $803 $845 $779
Slide 15: Grow Retail Franchise in TX and CA
Grow Retail Franchise in TX and CA Additional Product Expansion Opportunities : Expand consumer lending Grow small business banking Expand banking services to title insurance agencies and related transactions Offer expanded banking products to professionals Leverage branch network
Slide 16: Strategy
Strategy Grow commercial lending franchise Grow retail franchise in TX and CA Increase fee income Provide distinctive customer service Improved operating efficiency Maintain strong credit and risk standards We believe the combination of our strategy, management expertise, growing markets and financi
Slide 17: Increase Fee Income
Increase Fee Income *Excludes fee income from exited mortgage banking business. Fee Income* ($ in Millions) Diversified and growing fee income $136 $158 Loan and Other Fees Deposit Fees and Non-Deposit Investment Fees Insurance Commission and Fees $166 **Unaudited. $157
Slide 18: Increase Fee Income
Increase Fee Income Annuities and Mutual Funds Deposit Account Penetration Revenue per Licensed Banker Our non-deposit investment program has been very successful Source of Industry Average Data: 2006 Kehrer-ENSI Financial Institution Investment Program Benchmarking Study
Slide 19: Increase Fee Income
Increase Fee Income Los Angeles Dallas/Ft. Worth 9th largest bank-owned insurance agency in US The largest bank-owned agency based in TX In operation for over 50 years Products: Property and Casualty Group Benefits Risk Management Guaranty Insurance is an important source for growing fee income Guar
Slide 20: Increase Fee Income
Increase Fee Income Treasury Management Remote Deposit Capital Markets Wealth Management We believe we have significant additional cross sell opportunities
Slide 21: Strategy
Strategy Grow commercial lending franchise Grow retail franchise in TX and CA Increase fee income Provide distinctive customer service Improve operating efficiency Maintain strong credit and risk standards We believe the combination of our strategy, management expertise, growing markets and financia
Slide 22: Provide Distinctive Customer Service
Provide Distinctive Customer Service Successful in satisfying the needs of our customers Retail Customer Attrition Rates Guaranty Bank Industry Source of Industry Data: Council for Financial Competition Retail Customer Tenure (years) 10.2 8.1
Slide 23: Strategy
Strategy Grow commercial lending franchise Grow retail franchise in TX and CA Increase fee income Provide distinctive customer service Improve operating efficiency Maintain strong credit and risk standards We believe the combination of our strategy, management expertise, growing markets and financia
Slide 24: Improve Operating Efficiency
Improve Operating Efficiency Remain focused on expense management Other -- Charges related to asset impairments and severance 68% 65% 66% 74% Efficiency ratio (excluding charges related to asset impairments and severance charges) Information systems and technology Occupancy $181 $184 $182 $266 Compe
Slide 25: Strategy
Strategy Grow commercial lending franchise Grow retail franchise in TX and CA Increase fee income Provide distinctive customer service Improve operating efficiency Maintain strong credit and risk standards We believe the combination of our strategy, management expertise, growing markets and financia
Slide 26: Maintain Strong Credit and Risk Standards
Maintain Strong Credit and Risk Standards Average charge-off rate (2004 thru 2007) : Guaranty = .09% Peers* = .22% $10-50bn BHCs and THCs** = .21% Net charge-offs lower than our peers Net charge-offs as a percentage of average loans outstanding *Peers: ASBC, BOH, BOKF, BXS, CBSH, CFR, CNB, CYN, FCNC
Slide 27: Maintain Strong Credit and Risk Standards
Maintain Strong Credit and Risk Standards .85% .48% 1.17% Non Performing loans as a percentage of total loans Recent increase in historically low non- performing loans due to market conditions *Peers: ASBC, BOH, BOKF, BXS, CBSH, CFR, CNB, CYN, FCNCA, FMER, FULT, STSA, SUSQ, TCB, TSFG, WBS, and WTNY
Slide 28: Maintain Strong Credit and Risk Standards
Maintain Strong Credit and Risk Standards Net Interest Margin Despite volatility in interest rates, successfully maintained stable net interest margin
Slide 29: Financial Overview
Financial Overview
Slide 30: Earnings Highlights
Earnings Highlights $2.20 N/A N/A N/A Diluted Earnings Per Share 7.52% 11.67% 11.97% 10.00% Return on Average Equity .49% .72% .71% .56% Return on Average Assets Net Income (48) (70) (66) (56) Income Tax Expense Income Before Taxes (372) (388) (384) (534) Non-Interest Expense Non-Interest Income Net
Slide 31: Balance Sheet Highlights
Balance Sheet Highlights 32.16 N/A N/A N/A Book Equity Per Share 27.36 N/A N/A N/A Tangible Equity Per Share 1.1 1.0 1.0 0.9 Stockholders’ Equity 5.7 5.1 6.9 4.7 FHLB Borrowings 9.4 9.5 9.2 9.0 Deposits 15.7 15.2 16.7 15.2 Total Liabilities 5.5 5.4 6.2 4.7 Securities 9.9 9.6 9.8 9.6 Loans, net of al
Slide 32: Single-Family Mortgages Detail
Single-Family Mortgages Detail *Current loan to value reflects changes in loan balance and changes in property value since loan origination (with changes in value estimated using Office of Federal Housing Enterprise Oversight data from September 2007). **Lifetime loss projection from S&P Levels ® mo
Slide 33: Mortgage Backed Securities
Mortgage Backed Securities As of Dec. 31, 2007 ($ Billions) Amortized Cost Fair Value Available for Sale: Agency $0.57 $0.57 Private $1.37 $1.31 Held to Maturity: Agency $1.23 $1.23 Private $2.41 $2.20 Total: $5.58 $5.31 Private Issue MBS Adjustable rate All AAA rated Underlying collateral delinquen
Slide 34: Guaranty
Guaranty $ in millions $200 oe Homebuilder (Private) $150 Other $130 B Residential Mortgage $100 $50) ¢3 $36 $36 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07
Slide 35: Homebuilder Portfolios
Homebuilder Portfolios As of Dec 31, 2007 National (mostly public builders) Approximately half secured Borrowing base Regional (all private builders) Over 90% secured Policy limits Land Max. 50% Original LTV Lots Max. 75% Original LTV Houses Max. 80% Original LTV Guarantees
Slide 36: Regional Homebuilder Loans
Regional Homebuilder Loans *Represents approx. 3% of total loans. 7% Colorado Houses 100% 31% Other 5% Arizona 9% Florida 10% Texas 18% Other California 20% 258* Northern & Central California % of Total Total Land/Lots & Other As of December 31, 2007 ($ in millions)
Slide 37: Capital
Capital Guaranty as of December 31, 2007 Peers* as of September 30, 2007 OTS Well Capitalized Standard Total Risk-Based Capital Tier 1 Risk-Based Capital Tier 1 (Core) Capital (Leverage) 10% 6.0% 5.0% 10.5% 11.9% 7.7% 8.1% 9.6% 10.0% 5.8% 6.6% TCE/TA *Peers: ASBC, BOH, BOKF, BXS, CBSH, CFR, CNB, CYN
Slide 38: Creating Value For Shareholders
Creating Value For Shareholders Summary Long, Successful Track Record in Commercial Lending Great Markets Experienced, Cohesive Management Team It’s a New Day We believe Guaranty is uniquely positioned to maximize shareholder value
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